BILL NUMBER: SB 159	CHAPTERED  10/10/99

	CHAPTER   740
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 7, 1999
	PASSED THE SENATE   SEPTEMBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 8, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 3, 1999
	AMENDED IN SENATE   MAY 18, 1999
	AMENDED IN SENATE   APRIL 27, 1999
	AMENDED IN SENATE   APRIL 15, 1999

INTRODUCED BY   Senator Johnston
   (Principal coauthor:  Assembly Member Honda)
   (Coauthor:  Assembly Member Alquist)

                        JANUARY 7, 1999

   An act to amend and renumber Sections 25000 and 25001 of, and to
add Part 13.5 (commencing with Section 25000) to Division 1 of Title
1 of, the Education Code, relating to the State Teachers' Retirement
System, making an appropriation therefor, and declaring the urgency
thereof, to take effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 159, Johnston.  State Teachers' Retirement System:  health care
benefits.
   Under existing law, the State Teachers' Retirement System provides
retirement, disability, and survivor benefits to members of the
system and their beneficiaries.
   This bill would require the system to develop a program to provide
health care benefits to members of the system and to their
beneficiaries, children, and dependent parents, as defined, and would
require the costs incurred by the system to be paid by allocations
from the Teachers' Retirement Fund as appropriated for that purpose.
Implementation of the program would require enactment of a specific
statute.
   The bill would also appropriate $625,000 from the Teachers'
Retirement Fund to develop a program pursuant to the bill.
   The bill would declare that it is to take effect immediately as an
urgency statute.
   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 25000 of the Education Code is amended and
renumbered to read:
   24975.  (a) The board may develop one or more deferred
compensation plans under Section 457 of the Internal Revenue Code
that an employer may choose to establish and offer to its employees
who are members of the plan under this part or Part 14 (commencing
with Section 26000).
   (b) If an employer adopts a deferred compensation plan described
in subdivision (a):
   (1) The employer shall enter into a written contractual
arrangement with the system under which the system, or a third-party
administrator acting on behalf of the system, shall provide
investment, recordkeeping, and administrative services for the
deferred compensation plan.
   (2) The initial period of the contractual arrangement described in
paragraph (1) shall be for a term of five years.
   (3) The deferred compensation plan shall continue to constitute a
separate plan established and maintained by the adopting employer.
   (4) The system shall be treated as acting on behalf of the
employer in administering the deferred compensation plan.
   (5) The terms and administration of the deferred compensation plan
shall be in accordance with the applicable provisions of Section 457
of the Internal Revenue Code.
   (6)  In administering the deferred compensation plan on behalf of
the employer, the board shall have the same investment authority and
discretion and be subject to the same fiduciary standards pursuant to
Chapter 4 (commencing with Section 22250), with respect to amounts
deferred under the deferred compensation plan as applied by the
system with respect to the Teachers' Retirement Fund.
   (c) If an employer establishes and maintains a deferred
compensation plan described in subdivision (a), the deferred
compensation plan shall be offered to all of its employees who are
members of the plan under this part or Part 14 (commencing with
Section 26000).
   (d) An employee participating in a deferred compensation plan
established by an employer under this section shall enter into a
written agreement with the employer for the deferral of compensation
prior to the performance of the services to which that compensation
relates.
   (e) If an employer chooses to establish and maintain a deferred
compensation plan described in subdivision (a) that is to be
administered by the system, the employer shall take all necessary or
appropriate action to implement this section in cooperation with the
system.
  SEC. 2.  Section 25001 of the Education Code is amended and
renumbered to read:
   24976.  (a) The Teachers' Deferred Compensation Fund is hereby
established to serve as the repository of funds for the deferred
compensation plans administered by the system pursuant to this
chapter.  Notwithstanding any other provision of law, the system may
retain a bank or trust company to serve as custodian of the moneys of
the Teachers' Deferred Compensation Fund and to provide for
safekeeping, recordkeeping, delivery, securities valuation, or
investment performance reporting services, or services in connection
with investment of the Teachers' Deferred Compensation Fund.
   (b) The Teachers' Deferred Compensation Fund shall consist of the
following sources and receipts, and disbursements shall be accounted
for as set forth below:
   (1) Premiums determined by the system and paid by participating
employers and employees for the cost of administering the deferred
compensation plan.
   (2) Asset management fees as determined by the system assessed
against investment earnings of investment option or of other
investment funds.  These fees shall be disclosed to employees
participating in the deferred compensation plan.
   (3) Compensation deferrals to be paid in monthly installments by
employers sponsoring deferred compensation plans described in Section
24975 for investment by the system.  The moneys shall be deposited
in the investment corpus account within the Teachers' Deferred
Compensation Fund and invested in accordance with the investment
options selected by the participating employee.
   (4) All moneys in the Teachers' Deferred Compensation Fund for
disbursement to participating employees shall be continuously
appropriated without regard to fiscal year.  Disbursements to
participating employees shall be paid from a disbursement account
within the Teachers' Deferred Compensation Fund in accordance with
applicable federal law pertaining to deferred compensation plans.
   (5) Income, of whatever nature, earned on the Teachers' Deferred
Compensation Fund shall be credited to the appropriate account.  The
accounts of participating employees of the employer shall be
individually posted to reflect amounts of compensation deferred and
investment gains and losses.  A periodic statement shall be given to
each participating employee.
   (6) The system shall have exclusive control of the administration
and investment of the Teachers' Deferred Compensation Fund.
   (7) All of the system's costs of administering the deferred
compensation plans shall be recovered from the employees who
participate in the plans or assets of the Teachers' Deferred
Compensation Fund in a manner acceptable to the board.
  SEC. 3.  Part 13.5 (commencing with Section 25000) is added to
Division 1 of Title 1 of the Education Code, to read:

      PART 13.5.  HEALTH CARE BENEFITS PROGRAM
      CHAPTER 1.  GENERAL PROVISIONS

   25000.  (a) The State Teachers' Retirement System shall develop a
program to provide health care benefits for members, beneficiaries,
children, and dependent parents.
   (b) All costs incurred by the system pursuant to this part shall
be paid by allocations from the Teachers' Retirement Fund as
appropriated for that purpose.
   (c) The health care benefits program developed by the system
pursuant to this part shall not be implemented by the system unless
specifically authorized by a statute enacted by the Legislature.

      CHAPTER 2.  DEFINITIONS

   25100.  Unless the context otherwise requires, the definitions set
forth in this chapter govern the construction of this part.
   25110.  "Beneficiary" or "beneficiaries" means any person or
entity receiving or entitled to receive an allowance and payment
pursuant to Part 13 (commencing with Section 22000) or 14 (commencing
with Section 26000) because of the disability or death of a member.

   25115.  (a) "Dependent child" or "dependent children" means a
member's unmarried offspring or stepchild who is not older than 22
years of age and who is financially dependent upon the member on the
date the member becomes eligible for benefits pursuant to this part.

   (b) "Offspring" shall include the member's child who is born
within the 10-month period commencing on the date the member becomes
eligible for benefits pursuant to this part.
   (c) "Offspring" shall include a child adopted by the member.
   (d) "Dependent child" shall not include the member's offspring or
stepchild who is adopted by a person other than the member's spouse.

   (e) "Financially dependent," for purposes of this section, means
that at least one-half of the child's support was being provided by
the member on the date the member became eligible for benefits
pursuant to this part.  The system may require that income tax
records or other data be submitted to substantiate the child's
financial dependence.  In the absence of substantiating
documentation, the system may determine that the child was not
dependent on the date the member became eligible for benefits
pursuant to this part.
   25120.  "Dependent parent" or "dependent parents" means a natural
parent or parents of a member, or a parent or parents who adopted the
member prior to the earlier of the occurrence of the member's
marriage or his or her attaining 18 years of age, and who was
receiving one-half or more of his or her support from the member at
the time the member became eligible for benefits pursuant to this
part.
   25125.  "Member" means a current or retired employee of an
employer, as defined in Section 22131.
  SEC. 4.  There is hereby appropriated from the Teachers' Retirement
Fund the sum of six hundred twenty-five thousand dollars ($625,000)
to develop a health care benefits program pursuant to this act.
  SEC. 5.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to commence the development of a health benefits program
as soon as possible, it is necessary that this act take effect
immediately.
